November 2013 co web by Ucane

A publication of the Utility Contractorsâ&#x20AC;&#x2122; Association of New England, Inc.

NOVEMBER, 2013

Kathy & Jerry Gagliarducci

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Years of Excellence 1954-2013

NOVEMBER, 2013

IN THIS ISSUE

OFFICERS President AL MORTEO FED. CORP. President Elect TONY BORRELLI Celco Construction Corp. Treasurer JOHN OUR Robert B. Our Co., Inc. Secretary PAUL SCENNA Albanese D&S, Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. JEFF BARDELL Daniel O’Connell’s Sons, Inc. VINCENT BARLETTA Barletta Heavy Division MICHAEL BISZKO, III Biszko Contracting Corp. STEVEN COMOLETTI P. Caliacco Corp. MAUREEN DAGLE Dagle Electrical Const., Corp. ADAM DeSANCTIS DeSanctis Ins. Agency, Inc. THOMAS DESCOTEAUX R. H. White Const. Co., Inc. JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. MARCO GIOIOSO P. Gioioso & Sons, Inc. BILL IRWIN C.J.P. & Sons Const. Co., Inc. PHIL JASSET Honorary Board Member BILL KEAVENEY A. R. Belli, Inc. ROBERT LEE J. F. White Contracting Co. RYAN McCOURT McCourt Construction Co. RICHARD PACELLA, JR. R. M. Pacella, Inc. LOUIS SCHOOLCRAFT Ti-SALES, Inc. ANNE KLAYMAN Executive Director

5 President’s Message:

Where else but at a UCANE event can you expect to meet members of the construction, law enforcement, and medical communities?

7 Legislative Update:

• Joint Committee on the Environment, Natural Resources and Agriculture Holds Public Hearing on Senate President’s Legislation on Water Infrastructure • Attorney General Coakley Appoints Bob Ross Chief of the Attorney General’s Business and Labor Bureau • Clark Wins Nod in Democratic Primary in 5th Congressional Race; Will Face Republican Addivinola • Naughton and Healy Declare Intentions to Run for Attorney General

15 OSHA: December 1, 2013 Training Requirements for the Revised Hazard Communication Standard 19 UCANE Interview:

Sue Perez, Executive Director of the Water Pollution Abatement Trust

25 UCANE’s 40th Annual Christmas Party & Scholarship Auction 27 Environmental Viewpoint:

Construction and Demolition Waste

28 UCANE’s 59th Annual Banquet 46 UCANE’s 2013 Banquet Sponsors 48 Contractor Member of the Year:

Jerry Gagliarducci, Gagliarducci Construction, Inc.

Sue Perez

51 Associate Member of the Year:

John Sullivan, Jr., Boston Water & Sewer Commission

53 Dig Safe Update 2013 57 Financial Management: • • • • • •

Planning for “Permanent” Tax Laws Year-End Tax Planning for Investors Year-End Tax Planning for Retirement Year-End Estate Tax Planning Year-End Tax Planning for Donations Year-End Tax Planning for Business Owners

Editor: Anne Klayman, Associate Editor: Suzanne Savage, Graphic Designer: Sherri Klayman Construction Outlook Chairman: Al Morteo Editorial Board: Al Morteo, Tony Borrelli, John Our, and Paul Scenna CONSTRUCTION OUTLOOK published monthly by the Utility Contractors’ Association of New England, Inc., 300 Congress Street, Suite 101, Quincy, MA 02169; Tel: 617.471.9955; Fax: 617.471.8939; E-mail: aklayman@ucane.com; Website: www.ucane.com. Statements of fact and opinion are those of the authors alone and not necessarily those of UCANE and the Construction Outlook editorial board and staff. Subscriptions are included in dues payments for UCANE members. Presorted Standard postage paid at Abington, MA. POSTMASTER, please send form #3579 to Construction Outlook, Crown Colony Office Park, 300 Congress Street, Suite 101, Quincy, MA 02169.

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Where else but at a UCANE event can you expect to meet members of the construction, law enforcement, and medical communities? When I say it’s a privilege and an honor to be president of UCANE, I couldn’t be more sincere. I hope that every member, at one time or another will have the opportunity to lead this amazing group of people. UCANE is so much more than a trade association and to be affiliated with it, whether in a leadership role or as a member, brings each of us much pride.

ith the full support of our officers, board, members, and staff, our Association has shown, time and time again, that UCANE is so much more than just a group of businessmen and women in the construction industry. Our interests and concerns extend far beyond our own businesses to the public who have and will continue to benefit from our efforts. UCANE’s decision to recognize the law enforcement community at this year’s Banquet, specifically the Boston, Cambridge, MIT, Newton and Watertown Police Departments, as well as the Massachusetts State Police was our way of saying “thank you”. Police from these communities were some of the First Responders following the Boston Marathon bombings, helping the injured and later, under the command of our State Police, preserving the public’s safety and apprehending the perpetrators. Their efforts were nothing short of heroic. Selecting the law enforcement community for this recognition was also our way of saying thank you to the officers who, each day, protect and keep our crews safe while they are working on local city streets and on major highways. In addition, recognizing the contribution of the Boston doctors and researchers funded by grants from the Leukemia & Lymphoma Society of Massachusetts was also an honor for me, and every member who has supported our charitable efforts on behalf of LLS over the past 30 years. Our hope is to

NOVEMBER, 2013

someday be able to announce that a cure for Leukemia, Lymphoma, and other blood related diseases has been found. The highlight of the evening, as it has been for the last 59 years, was the presentation of our Contractor and Associate Member of the Year Awards. This years winners, selected by their peers, were John Sullivan, Jr., Chief Engineer of the Boston Water and Sewer Commission who was presented with our Associate Member of the Year Award; and Jerry Gagliarducci, President of Gagliarducci Construction, Inc. who was presented with our Contractor of the Year Award. Both men were recognized for their contributions in making our Association better, stronger, and more professional.

This edition of Construction Outlook is devoted to UCANE’s 59th Annual Banquet and the men and women who helped make “Boston Strong”. Articles and photos can be found throughout this month’s magazine. It was an incredible evening and I hope everyone had a great time. It is my hope that all of our members will plan to attend next year’s Banquet when UCANE will be celebrating its 60th Anniversary. n

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Joint Committee on the Environment, Natural Resources and Agriculture Holds Public Hearing on Senate President’s Legislation on Water Infrastructure

ith the October filing of Senate President Therese Murray’s effort to tackle the Commonwealth’s water infrastructure, the Joint Committee on the Environment and Natural Resources held a public hearing to hear feedback on the initiative. The legislation, which authorizes increased borrowing and incentives to improve water infrastructure, attracted a wide range of environmental, municipal, and labor groups. The bill would authorize the state to provide up to an additional $50 million per year in contract assistance through the Water Pollution Abatement Trust to help fund local water and sewer projects at low, flexible interest rates for cities and towns. The Water Pollution Abatement Trust’s Executive Director, Susan Perez, offered support for the legislation saying that it would provide incentives for local leaders to move forward on water projects. In turn, she reminded committee members that such projects will then create jobs throughout the Commonwealth. As contemplated under the legislation, municipalities would also be allowed to charge new mitigation fees on business or residential developers to cover

costs of drawing more water. Such mitigation fees, however, may be spent on initiatives unrelated to the impact on the local water infrastructure. The provision, which is opposed by NAIOP Massachusetts, is likely to be one area of active debate. In addition, while the legislation’s assistance to the Massachusetts Water Resources Authority for communities interested in joining the regional water authority drew some attention, it was mostly from observers’ interest in seeing the same assistance to non-MWRA communities. Legislators from Western Massachusetts continue to question whether such legislation will benefit rural communities that are not part of, nor will be part of, the MWRA. Finally, while many at the hearing applauded the filing of this legislation as a first step, many groups indicated that there is a real need for new revenue to fund water infrastructure improvements. The Chairmen of the Joint Committee on the Environment and Natural Resources, State Senator Marc Pacheco and State Representative Ann Gobi, indicated that they will be taking a comprehensive look at the legislation before releasing it. continued on page 9

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Legislative Update continued from page 7

Attorney General Coakley Appoints Bob Ross Chief of the Attorney General’s Business and Labor Bureau

s reported in the State House News Service, Senate President Therese Murray’s chief policy advisor, Robert Ross, has been appointed the new chief of the business and labor bureau in Attorney General Martha Coakley’s office. Ross, an attorney, had been Murray’s chief policy advisor, helping to lead the recent transportation and tax debate. Most recently, he put in long hours drafting the Senate President’s water infrastructure legislation. Before he worked with the Senate President, Ross worked as budget director and legal counsel for the Senate Committee on Ways and Means and as legal counsel to the Massachusetts Division of Insurance and State Rating Bureau. A graduate of the College of William and Mary and Northwestern University

Law School, Ross will oversee Coakley’s work around business, technology and economic development; energy and telecommunication; fair labor practices; Medicaid fraud; and non-profits and public charities. In her remarks announcing his departure, the Senate President offered the following assessment: “Bob Ross has established an unmatched expertise on some of our toughest and most complex issues and he has successfully led the Senate through a number of priorities including transportation finance and reform, electricity and storm response bills, and economic development legislation”. Ross began his tenure at the Attorney General’s Office on November 4. continued on page 11

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Legislative Update continued from page 9

Clark Wins Nod in Democratic Primary in 5th Congressional Race; Will Face Republican Addivinola

tate Senator Katherine Clark, a Melrose Democrat, and Republican Frank Addivinola of Boston won their respective 5th Congressional District primaries in mid-October. Senator Clark, who has been profiled in Construction Outlook previously, defeated Middlesex County Sheriff Peter Koutoujian, State Representative Carl Sciortino (D-Medford), State Senator Will Brownsberger (D-Belmont), and State Senator Karen Spilka (DFramingham). Considered a “no lose” election for Democrats based on the strength of each competitor in a potential general election, Senator Clark won by cobbling together a strong showing from her base with outreach throughout the district. The current Senate Chairwoman of the Joint Committee on the Judiciary, Senator Clark will face Republican Frank Addivinola on December 10. Addivinola, who does not live in the district, bested two perennial Republican challengers who actually do live in the district. Should Senator Clark win on December 10, a spe-

cial election would be required to fill her seat. Early names being bantered about include State Representative Paul Brodeur (D-Melrose), State Representative Jason Lewis (D-Winchester), and State Representative Chris Fallon (D-Malden). continued on page 13

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Legislative Update continued from page 11

Naughton and Healy Declare Intentions to Run for Attorney General

he race for the Office of the Attorney General finally came to life after Massachusetts Secretary of State Bill Galvin stated that he will run for re-election instead of opting for the Attorney General position. Soon after, State Representative Harold “Hank” Naughton (D-Clinton) announced that he would be running for Attorney General after Coakley’s decision to run for Governor. Naughton, 53, has served in the Massachusetts House of Representatives since 1995.

Naughton, currently the House Chairman of the Joint Committee on Public Safety, is also an active member of the United States Army Reserve. Following the terrorist attacks of September 11, 2001, Naughton joined the United States Army Reserve. Now a Major, Naughton has served tours of duty in Iraq and Afghanistan, and participated in an advisory mission in the Congo. He is currently assigned to the Third Legal Operational Detachment and as an adjunct to the Defense Security Coop-

eration Agency, Defense Institute of International Legal Studies. Naughton, is a graduate of Clinton High School, Assumption College, and Suffolk University School of Law. He lives in his hometown of Clinton with his wife Ellen and their children Harrison, Tiernan, Clare, and Eamon. Representative Naughton will face off against Maura Healey, former chief of the business and labor bureau and the public protection and advocacy bureau, who recently resigned from the Attorney General's Office to pursue her campaign. A New Hampshire native with family roots in Newburyport, Healey is best known for successfully arguing against the Defense of Marriage Act, which denied same-sex spouses in Massachusetts access to federal marriage benefits, before the U.S. District Court in Boston and a federal appeals court. A third contender, former State Senator Warren Tolman, is said to be mulling his own entry into the race. n

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IMPORTANT Employers Must Have Trained Their Workers on the Revised Hazard Communication Standard by December 1, 2013.

FactSheet December 1st, 2013 December 1,Training 2013 Training Requirements for the Revised Requirements for Hazard the Communication Standard Revised Hazard Communication Standard OSHA revised its Hazard Communication Standard (HCS) to align with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (GHS) and published it in the Federal Register in March 2012 (77 FR 17574). Two significant changes contained in the revised standard require the use of new labeling elements and a standardized format for Safety Data Sheets (SDSs), formerly known as, Material Safety Data Sheets (MSDSs). The new label elements and SDS requirements will improve worker understanding of the hazards associated with the chemicals in their workplace. To help companies comply with the revised standard, OSHA is phasing in the specific requirements over several years (December 1, 2013 to June 1, 2016).

OSHA revised its Hazard Communication Standard (HCS) to align with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (GHS) and published it in the Federal Register in March 2012 (77 FR 17574). Two significant changes contained in the revised standard require the use of new labeling elements and a standardized format for Safety Data Sheets (SDSs), formerly known as, Material Safety Data Sheets (MSDSs). The new lafirst compliance date of the revised HCS and “Warning.” Within a specific hazard bel elements The and SDS requirements will improve worker understanding of the is December 1, 2013. By that time employers class, “Danger” is used for the more severe must have trained their workers on the new hazards and “Warning” is used for the hazards associated with the chemicals in their workplace. To help companies label elements and the SDS format. This training less severe hazards. There will only be one is needed early in the transition process since signal word on in the label matter how comply with the revised standard, OSHA is phasing thenospecific requirements workers are already beginning to see the new many hazards a chemical may have. If one over several years (December 1, 2013 to June 1, 2016). labels and SDSs on the chemicals in their of the hazards warrants a “Danger” signal workplace. To ensure employees have the informationdate they need to better protect themselves The first compliance of the revised HCS is from chemical hazards in the workplace during December 1, 2013.the By that time employers have transition period, it is critical thatmust employees understand thenew new label and elements SDS formats. and trained their workers on the label The list below contains the minimum required the SDS format. This training is needed early in the topics for the training that must be completed by transition process December since workers are already begin1, 2013. ning to see the new labels SDSs must on the chemi Training on and label elements include information on: cals in their workplace. To ensure employees have • Type of information the employee would the information they expect needto see to onbetter themthe new protect labels, including the Product identifier: how the hazardousdurselves from chemical✓hazards in the workplace chemical is identified. This can be (but is ing the transition period, it is critical that employees not limited to) the chemical name, code understand the new label andor SDS formats. number batch number. The manufacturer, importer or distributor can decide the The list below contains the minimum required appropriate product identifier. The same product identifier must be both onby theDelabel topics for the training that must be completed and in Section 1 of the SDS (Identification). cember 1, 2013. ✓ Signal word: used to indicate the relative level of severity of hazard and alert the inTraining on label elements must reader to a potential hazard on the label. clude information on: There are only two signal words, “Danger” • Type of information the employee would expect to see on the new labels, including the:

NOVEMBER, 2013

word and another warrants the signal word “Warning,” then only “Danger” should • Product identifier: How the hazardous appear on the label. chemical identified. This can be (but is not ✓ Pictogram: OSHA’sisrequired pictograms mustlimited be in the shape of a square set at aname, code number, to) the chemical point and include a black hazard symbol batch number. The manufacturer, importon aor white background with a red frame sufficiently enough to becan clearlydecide the appropriate er, orwide distributor visible. A square red frame set at a point product same product identifier without a hazardidentifier. symbol is notThe a pictogram and must is not permitted on the be both onlabel. theOSHA label and in Section 1 of has designated eight pictograms under the SDS (Identification). this standard for application to a hazard category. • Signal word: Used to indicate the relative ✓ Hazard statement(s): describe the nature level of severity ofincluding, hazard and alert the reader of the hazard(s) of a chemical, where the degree of hazard. toappropriate, a potential hazard on the label. There are For example: “Causes damage to kidneys only two signal words, “Danger” and “Warnthrough prolonged or repeated exposure when absorbed through the skin.” All of ing.” Within a specific hazard class, “Danthe applicable hazard statements must ger” is label. usedHazard for the moremay severe hazards and appear on the statements be combined whereis appropriate to reduce “Warning” used for the less severe hazards. redundancies and improve readability. The There will only be one signal word on the lahazard statements are specific to the hazard

bel no matter how many hazards a chemical continued on page 17

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OSHA continued from page 15 may have. If one of the hazards warrants a “Danger” signal word and another warrants the signal word “Warning,” then only “Danger” should appear on the label. • Pictogram: OSHA’s required pictograms must be in the shape of a square set at a point and include a black hazard symbol on a white background with a red frame sufficiently wide enough to be clearly visible. A square red frame set at a point without a hazard symbol is not a pictogram and is not permitted on the label. OSHA has designated eight pictograms under this standard for application to a hazard category. • Hazard statement(s): Describe the nature of the hazard(s) of a chemical, including, where appropriate, the degree of hazard. For example: “Causes damage to kidneys through prolonged or repeated exposure when absorbed through the skin.” All of the applicable hazard statements must appear on the label. Hazard statements may be combined where appropriate to reduce redundancies and improve readability. The hazard statements are specific to the hazard classification categories, and chemical users should always see the same statement for the same hazards, no matter what the chemical is or who produces it. • Precautionary statement(s): Means a phrase that describes recommended measures that should be taken to minimize or prevent adverse effects resulting from exposure to a hazardous chemical or improper storage or handling. • Name, address, and phone number of the chemical manufacturer, distributor, or importer. • How an employee might use the labels in the workplace. For example: • Explain how information on the label can be used to ensure proper storage of hazardous chemicals. • Explain how the information on the label might be used to quickly locate information on first aid when needed by employees or emergency personnel. • General understanding of how the elements work together on a label. For example: • Explain that where a chemical has multiple

NOVEMBER, 2013

hazards, different pictograms are used to identify the various hazards. The employee should expect to see the appropriate pictogram for the corresponding hazard class. • Explain that when there are similar precautionary statements, the one providing the most protective information will be included on the label. Training on the format of the SDS must include information on: • Standardized 16-section format, including the type of information found in the various sections. • For example, the employee should be instructed that with the new format, Section 8 (Exposure Controls/Personal Protection) will always contain information about exposure limits, engineering controls, and ways to protect yourself, including personal protective equipment. • How the information on the label is related to the SDS. • For example, explain that the precautionary statements would be the same on the label and on the SDS.

As referenced in Dr. Michaels’ OSHA Training Standards Policy Statement (April 28, 2010) – with all training, OSHA requires employers to present information in a manner and language that their employees can understand. If employers customarily need to communicate work instructions or other workplace information to employees in a language other than English, they will also need to provide safety and health training to employees in the same manner. Similarly, if the employee’s vocabulary is limited, the training must account for that limitation. By the same token, if employees are not literate, telling them to read training materials will not satisfy the employer’s training obligation. OSHA’s Hazard Communication website (http:// www.osha.gov/dsg/hazcom/index.html) has the following QuickCards and OSHA Briefs to assist employers with the required training. • Label QuickCard (English/Spanish) • Pictogram QuickCard (English/Spanish) • Safety Data Sheet QuickCard (English) (Spanish) • Safety Data Sheet OSHA Brief • Label/Pictogram OSHA Brief (to come) n

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Sue Perez Executive Director of the Water Pollution Abatement Trust

Sue Perez was appointed Executive Director of the Water Pollution Abatement Trust in March of 2012, after working for the Trust since September 2009 as the Chief Compliance Officer and simultaneously as Internal Auditor for the Office of the Treasurer. She has over 20 years of experience in accounting, audit, and financial management in corporate America. Prior to joining the Trust in 2009, she served as Senior Director of Finance at BearingPoint, a $3.4 billion global management and technology-consulting firm. At the company, she was responsible for the Corporate Accounting Group consisting of 60 professionals and helped to oversee a $60 million government accounting system implementation. Other experiences included being one of the initial members of a start-up company with the responsibility of establishing the finance and human resources departments as well as working for PriceWaterhouseCoopers during which she received her CPA.

Q: A:

Please give our readers some insight into how you got involved in state government.

In 2009, I was at a crossroad in my career. My employer had filed bankruptcy and I was working with them to assist in divesting its various business units. I had to decide what I wanted to do next. The past eight years were fast-paced, high stress, long hours, with significant travel, which had taken a toll on my family. It was time for a change. Also, having school age children and realizing all the resources I consume from my community, I felt it was time to give something back. As with any other career decision I had made historically, I wanted to ensure that the next step would continue to build on my skill set and add to my knowledge base. My background in audit and accounting provided the necessary skills that the Trust was seeking after it had received the $185 million in stimulus funds and all the compliance requirements that came with the funds. As Executive Director of the Trust, I have a great job! I am fortunate to work with so many diverse groups of individuals, all working to provide vital services at affordable and sustainNOVEMBER, 2013

able levels to the citizens of the Commonwealth. These include community treasurers and finance teams, the Department of Environmental Protection, the Executive Office of Administration and Finance, investment bankers, rating agencies, the investment community, the engineering community, attorneys, and financial advisors, among others. I have learned a lot in these past 19 months as Executive Director and continue to expand my knowledge base every day. There are few services more critical than supplying clean water to our cities and towns, and I am enjoying my role in the Trust’s ongoing work with communities all over the Commonwealth.

As Executive Director of the Water Pollution Abatement Trust, you are aware that access to clean drinking water and proper management of wastewater is critical, but that the debt burden on municipalities interferes with their ability to make needed improvements to water infrastructure. In light of the elevation of water infrastructure as a priority this legislative session, can you share your thoughts relative to the importance of maintaining our water and wastewater infrastructure? continued on page 21

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Water infrastructure investment and improvement is vital to the public health and economic well being of the Commonwealth. By making the conscious choice to put money into these improvements, communities are protecting their citizens. In turn, businesses want to stay in the community since there is access to clean drinking water and a reliable disposal of wastewater. In addition to providing a safe environment, investing in water infrastructure also puts people to work. An estimated 40% of the total cost of a construction job is direct labor, and that means people working and putting their money back into the local economy, helping to improve it for everyone.

As the overseer of the State Revolving Loan Fund Program (SRF), your office provides important financial assistance to communities for critical wastewater and drinking water infrastructure projects. Please explain the significance of this program and the benefits of using the SRF program.

The Trust has been administering the SRF program since the inception of the EPA grants in 1989. Since that time, the Trust has loaned out roughly $6 billion dollars to communities throughout the state. The largest agency in the state for providing capital for

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The SRF is critical to communities because it provides access to reliable, low cost capital financing due to our AAA bond rating, leveraging of EPA grants, and the commitment made by the Commonwealth to support the program. water infrastructure, our loans have benefited an estimated 97% of the state’s population. The SRF is critical to communities because it provides access to reliable, low cost capital financing due to our AAA bond rating, leveraging of EPA grants, and the commitment made by the Commonwealth to support the program. Water infrastructure projects take time to develop, from the planning and approval process until ground is broken on the project. The SRF program works with communities that have dedicated their time to doing this work. Further, we commit to the borrowers that if they meet the outlined requirements, the project will be funded, and will be funded on their schedule. With our Interim Loan program we are able to fund project costs when they come in, making it possible for projects to be fully funded through the SRF program without having to delay construction or pay any principal or interest payments during the Interim Loan period. In addition to our ability to fund the project through its life, the Trust can do it at well below market rates. For our interim financing, we offer a rate that is half of what we receive through our MMDT money market account, currently at .13%. Once the loan has been drawn on and is financed with Trust bond proceeds, it is financed at a rate of 2%. For our last bond sale, even in the current low interest rate environment, communities saved 30% on interest over the life of the loan compared to the market rate. As well, we provide savings on the costs of issuing bonds through economies of scale as these costs are spread across all the borrowers being funded with the Trust’s bond proceeds (usually 70-90 borrowers). No one community is paying for all the associated costs. For example, when issuing bonds, an issuer must pay for bond counsel fees, financial advisor fees, rating agency fees, and underwriter costs. If a community issues their own bonds, the community takes all of these costs on. Our model allows for each community to pay a share of the cost, making it less expensive for each of our borrowers.

Traditionally, it is understood that municipalities may face one or more barriers to securing the funding needed to proceed with important water and wastewater infrastructure projects. What is the WPAT’s role in removing some of those barriers? What are continued on page 23

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Interview continued from page 21 some ways the WPAT can further incentivize communities to utilize the programs offered through the WPAT?

When communities have water infrastructure needs, but do not move forward with the project, it is usually due to not being able to get the authorization from the political body, be it city council or town meeting. Where the Trust tries to help is by getting the word out on what that 2% rate means to future debt service. If people can understand that saving 2% or more over the 20-year life of a loan is substantial, more projects would move forward once approved. Marketing the Trust is an ongoing process, one that we are striving to improve. We hope that borrowers know the funds are available at a cost saving rate, if their project qualifies. While we hope to be able to offer certain borrowers additional subsidization if they meet specific criteria, this will require new legislation. However, at this time, even at the current low interest rate, we have approved approximately $500 million of water infrastructure projects a year for financing.

While many people think of the WPAT as a financier for cities and towns, they do not realize that the WPAT is also one of the Commonwealth’s leading engines for job development. Please explain the WPAT’s role in creating jobs throughout the Commonwealth.

The Trust is proud of our track record of getting money out the door for shovel ready projects and getting people working throughout the Commonwealth. Our program is designed to fund projects that are ready to proceed within a year of being selected for funding. For our last bond deal, we financed $340 million in projects creating an estimated 2,000 jobs. These are construction and engineering jobs in the Commonwealth that are putting people to work and helping to improve the quality of life for the citizens at the same time, it is really a win/win.

We will be allowed to offer loans at interest rates less than 2% for projects that meet certain to-be-determined criteria, most likely focused on best management practices. Also, the Trust will be able to provide additional principal forgiveness on projects; over and above the amount we currently provide each year from the federal grants. The goal of the new legislation is to incentivize communities to move forward with projects and to implement better management practices that will benefit the community in the long run. We at the Trust hope to be able to cut down on the rate of projects that do not move forward due to the failure to secure their borrowing authorization. This is done by providing more information to the communities about what a 2%, or lower, rate and principal forgiveness means over the life of a loan. If the legislation passes and we can offer 1% loans or 0% loans, it could save communities $1.84M and $2.38M, respectively, on an average $5M loan compared to the market rate. These savings, coupled with the implementation of best management practices, would put these communities in a better place to handle the infrastructure gap in their city or town for years to come. The most important aspect to remember with the new legislation is that the Trust wants to encourage best management practices, not punish communities that have not implemented any yet. The best way to do this is to offer incentives in the form of additional subsidization to encourage implementation of these changes. n

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Recent legislation proposed in the legislature would provide the WPAT with more flexibility in administering its programs. Please share your thoughts about what the WPAT will be able to accomplish with this additional authority.

By amending the Trust’s enabling statute, the Trust would be able to save communities even more money while providing guidelines and incentives for implementing best management practices. The legislation will allow the Trust to provide additional subsidization to municipalities to invest in water infrastructure.

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Construction and Demolition Waste Note: Robin L. Main is a Partner in Hinckley Allen LLP’s litigation group and co-chair of the firm’s environmental practice group. Rhiannon A. Campbell is an Associate in Hinckley Allen LLP’s litigation and environmental practice groups.

Construction and demolition (“C&D”) materials generated during the renovation of buildings, roads, and bridges account for approximately 25 percent of the solid waste discarded in the United States, or about 130 million tons per year. C&D materials can include, among other materials, concrete, wood, asphalt, glass, plastics, metals, and architectural salvage materials. This waste has a significant impact on our environment, not only to our landfills, but in the cost of disposing of these materials.

here are significant benefits to reducing the amount of C&D waste. Reducing C&D waste limits the environmental impact of producing and transporting new materials and conserves landfill space. Reductions further benefit developers and contractors by avoiding unnecessary purchase and disposal expenses, thereby reducing overall project costs. Recognizing these benefits, state and local governments have made efforts to reduce this waste by requiring contractors to recycle a percentage of it or by limiting the ability of contractors to dispose of C&D materials in municipal landfills. From almost any job site, 90-95 percent of all waste materials can be recycled. In most cases, the cost of recycling is lower than the cost of disposing of materials. For example, in 2000, the Massachusetts Department of Environmental Protection (“MassDEP”) committed to limiting 88 percent of C&D waste by 2010. In 2006, to aid this goal, MassDEP placed a disposal and transfer ban on asphalt paving, brick, concrete, metal, and wood. Developing a Waste Management Plan will ensure that C&D waste recycling is seamlessly built into a construction project. A Waste Management Plan should include overall recycling goals for the project, material-by-material instructions for how each material will be handled (i.e., recycled or disposed of), train-

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Given the cost benefits associated with recycling C&D materials on-site, contractors should consider developing a Waste Management Plan. In 2005, MassDEP developed both a sample plan and a guide to the development of such a plan. These documents can be found at http:// www.mass.gov/eea/docs/dep/recycle/ reduce/06-thru-l/cdrguide.pdf n

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It was a night to take pride in the fact that we are Bostonians, and that we are “Boston Strong.” It was a night to remember that our generation, like generations before us, were exposed to horrific events and rose to the occasion with both heroism and patriotism. It was a night to recognize and honor the people that make Boston such a vibrant, livable city, and the epicenter of the medical world. It was a night to recognize those UCANE members who have contributed so much time and energy to make our Association a powerful and effective advocate for clean drinking water. It was a night to say “thank you” to the law enforcement officers who not only keep us safe day after day, but who, during the days and nights following the Boston Marathon, went above and beyond their call of duty to protect the public and bring justice for the victims. But with all that we remembered, first and foremost it was a night to celebrate and enjoy good company, fabulous food and drink, and great entertainment…and celebrate we did! The evening was perfect. As members and their guests arrived they were directed to the Commonwealth Ballroom where they enjoyed cocktails and hors d’oeuvres. As the last of the 625 guests had their fill of the Hot and Cold Seafood Bars and NOVEMBER, 2013

the Tuscan Bar, and as the last glass was filled at the Martini Bar, they were summoned upstairs to the Grand Ballroom, which was decorated in a white, silver, and blue color scheme to highlight the evening’s theme of “Boston Strong.” Flowing sheer fabric was draped from each corner of the ceiling, forming a canopy over the dance floor, which came alive with brilliant long strands of crystals hung from the ceiling with a large crystal chandelier positioned in the center. Along the side and rear walls of the ballroom, floor to ceiling sheer fabric panels were up lit with blue lights, giving the room a warm hue. Completing the fabulous décor, tables were set with royal blue tablecloths with silver lace and sequined overlays. Table centerpieces alternated between elegant candelabras, sets of three crystal candleholders, and vases of white hydrangeas, roses, and calla lilies. The stage was highlighted with a floor to ceiling silver sequined and lace curtain that formed the perfect backdrop for the band. Two large screens, positioned on each side of the stage, provided a visual of our “Boston Strong” logo, reminding the audience of the evening’s theme. continued on page 30

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Banquet continued from page 29

UCANE’s Officers & Board Members (L-R): Richard Pacella, Jr., R. M. Pacella, Inc.; Tony Borrelli, Celco Const. Corp.; Paul Scenna, Albanese D&S, Inc.; Louis Schoolcraft, Ti-SALES, Inc.; Bill Keaveney, A. R. Belli, Inc.; Bill Irwin, C.J.P. & Sons Construction Co., Inc.; Marco Gioioso, P. Gioioso & Sons, Inc.; Jerry Gagliarducci, Gagliarducci Const., Inc.; Thomas Descoteaux, R. H. White Const. Co., Inc.; Maureen Dagle, Dagle Electrical Const., Corp.; Michael Biszko, III, Biszko Contracting Corp.; Al Morteo, FED. CORP.; Phil Jasset; Robert Lee, J. F. White Contracting Co.; and Ryan McCourt, McCourt Const. Co. xecutive Director Anne Klayman officially opened the evening’s program with welcoming remarks and she then introduced UCANE’s Officers and Board Members who were in attendance. Before the festivities could get into full swing there was important business to be taken care of…the presentation of our highly coveted 2013 Contractor and Associate Member of the Year awards. Anne stated that our award recipients were selected by their peers with special attention given to their efforts to improve our Association and our industry. This year, members voted Jerry Gagliarducci (Gagliarducci Construction, Inc.) as Contractor of the Year, and John Sullivan, Jr. (Boston Water and Sewer Commission) as Associate Member of the Year. Because the recipient’s names had been kept a secret by members, families, and friends, neither Jerry nor John were aware they would be receiving these awards and were additionally surprised when their family members and friends entered the ballroom to witness them receiving their awards. Recognition of the Boston Marathon First Responders, specifically law enforcement personnel, was another important part of the award’s program. UCANE members chose to honor representatives from the police departments that assisted during the aftermath of the Boston Marathon bombings by presenting each with a plaque commemorating this event. Represent-

ing the law enforcement contingent were: Lieutenant Michael Chapman, Boston Police; Superintendent Steven Williams, Cambridge Police; Captain Albert Pierce and Captain David Carlson, MIT Police; Senior Patrol Officer Peter Koerber and Senior Patrol Officer Tyrone Powell, Newton Police; Captain Raymond Dupruis, Watertown Police; and Lieutenant Colonel James Hanafin and Lieutenant Colonel Frank Matthews, Massachusetts State Police. UCANE also honored former New England Patriots’ and three time Superbowl Champions Joe Andruzzi and Matt Chatham who were near the finish line on that fateful day and assisted the victims. In addition, UCANE presented each police department with a 50-inch Sanyo television for their training rooms, to show our appreciation for all that they did to keep the public safe and apprehend the perpetrators.

ontinuing the program, Anne stated that more than 100 member companies had sponsored various segments of our Banquet. She said, “The caliber, commitment, and support of our members is what distinguishes our Association from others. Two of the companies who exemplify this generosity and commitment are C. N. Wood Company, Inc. and Komatsu who have been UCANE’s Banquet Hosts for the past 14 years.” She then listed the major sponsors as: Jay Cashman, Inc. (Hot Seafood Bar); Concrete Systems, Inc. (Cold Seafood Bar); Scrap-It, Inc./Minichiello Bros., Inc. (First Responders’ Gifts); United Rentals Trench Safety (Special Men’s Gifts); Aggregate Industries-N.E. Region and HD Supply Waterworks (co-sponsors of our Martini Bar); USI Insurance Services, LLC (Entertainment); Eastern States Insurance Agency, Inc. (Candy Buffet); Barletta Heavy Division, James J. Dowd & Sons Insurance, Hinckley Allen, LLP, McCourt Construction Company, Shea Concrete Products, United Rentals Trench Safety, and J. F. White Contracting Co. (Band); and American Shoring Inc., Gagliarducci Construction, Inc., Garrity Asphalt Reclaiming, Inc., Liddell Brothers, Inc., Robert B. Our Co., Inc., Taylor Oil Company, and Zurich Surety (Sundae Bar). A complete list of sponsors can be found on pages 46-47. continued on page 33

UCANE honored some of the First Responders for their heroic efforts following the Boston Marathon.

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Banquet continued from page 31 ollowing the awards presentation Anne continued with special recognition of UCANE’s charitable giving. “When I tell you that UCANE is a unique organization, I truly mean it. What really makes UCANE special is first and foremost our members. They not only support our Association’s mission, but they are both individually and collectively, the most charitable and wonderful group of people I’ve ever had the good fortune to be associated with. More than 30 years ago, UCANE made the Leukemia & Lymphoma Society our Association’s official charity. Over the years, UCANE members have helped raise millions of dollars to provide grants for local researchers. Once again this year we have invited some of the doctors and researchers who were the recipients of our grants, so that we can recognize their commitment to patient care and also to help find a cure,” she stated. Anne introduced each of the doctors, and also UCANE President Al Morteo (FED. CORP.), who currently, serves as President of the Leukemia & Lymphoma Society of Massachusetts. The doctors included: • Dr. Vicki Bousiotis: Professor at Harvard Medical School who specializes in hematology and oncology. • Dr. Irene Ghobrial: Associate Professor of Medicine at Dana Farber Cancer Institute who specializes in multiple myeloma. • Dr. Anthony Letai: Medical Oncologist at Dana Farber Cancer Institute and Assistant Professor of Medicine at Harvard Medical School. • Dr. Yvonne Tay: Postdoctoral Fellow at Beth Israel Deaconess Medical Center and a Research Fellow at Harvard Medical School. • Dr. David Weinstock: Attending Physician in Medical Oncology at Dana Farber Cancer Institute and Assistant Professor in the Department of Medicine at Harvard Medical School. Dr. Weinstock ran the Boston Marathon this year and finished 86 seconds before the first bomb went off and was there to help the victims.

Doctors from the Boston Medical community. Anne went on to say, “These are some of our very own special hometown heroes.” With the ceremonies completed Anne officially kicked off the festivities by reminding everyone that the raffle ticket they had been given when they entered could win them one of seven sensational prizes. She then clarified the rules to win one of the prizes, saying “without exception and in fairness to all, the winner has to be on the dance floor when their name is called to be eligible to win. And, if you are on the dance floor you will be asked a multiple choice question about our resilient City of Boston.” The fabulous prizes of the evening included: a white gold and sterling toggle necklace donated by Vellano Bros., Inc.; a Bose portable sound dock; $150 in lottery tickets; a blue and white sapphire heart necklace; the latest iPad Mini; a 14k gold and sterling designer bracelet; and a 42-inch Sanyo TV. continued on page 35

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NOVEMBER, 2013

Banquet continued from page 33

n keeping with tradition of doing something different to kick off the party and keeping with the “Boston Strong” theme, Anne asked the men at each table to stand and sing along as loud as they could to “Love that Dirty Water.” She then asked the women to join the men and all sing along to “Sweet Caroline.” Because everyone did such a terrific job each person received a lottery ticket. UCANE’s President-Elect Tony Borrelli (Celco Construction Corp.) then gave the invocation and we embarked on a night of music, entertainment, and camaraderie. In keeping with the theme our entertainment was a tribute to Boston’s own disco diva Donna Summer. Whether it was the music, the tribute to Donna Summer, the amazing food served throughout the evening, topped off with our fabulous Gourmet Sundae Bars and Coffee Carts, the not to be missed Sweet Endings Candy Buffet, the ladies’ gifts of designer bracelets, the men’s gifts of “Boston Strong” t-shirts, hats, and wrist bands, the hundreds of light up giveaways, or Anne’s unique way of giving away the raffle prizes…UCANE’s 59th Annual Banquet was “Boston Strong” from start to finish! What will stay with us long after the evening ended is that for a few hours we honored two of our own, and let the Boston Marathon First Responders know how grateful we are for their service.

This incredible evening was only made possible by the generosity of our members. Therefore, UCANE would like to thank all of the companies that sponsored various segments of our Banquet. Once again the UCANE Banquet was the not to be missed event of the year. We look forward to seeing all of you next year at UCANE’s 60th Anniversary Banquet. n

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Hot Seafood Bar

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Cold Seafood Bar

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Martini Bar

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A. R. Belli, Inc. Dagle Electrical Const., Corp. Darmody, Merlino & Co., LLP EJ Ferguson Waterworks HD Supply White Cap HUB Int’l New England, LLC Ocean State Oil Oldcastle Precast, Inc. Qualified Pension Services, Inc. Rain for Rent - New England

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Presentation Bouquets

C.J.P. & Sons Const. Co., Inc. FED. CORP. L. Guerini Group Inc. P. A. Landers, Inc. RJV Construction Corp. The Scituate Companies Ti-SALES, Inc. Tim Zanelli Excavating

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he Contractor Member of the Year Award is the highest honor bestowed on a UCANE member. Previous recipients are some of the most respected and successful men and women who continue, year after year, to work for the betterment of our industry. They each represent the high standard of business excellence that our Association has come to expect. This year’s recipient fits this high standard perfectly. Our members voted Jerry Gagliarducci, President of Gagliarducci Construction, Inc. as UCANE’s 2013 Contractor of the Year. His company is a fourth generation family run business, which this year, is celebrating its 113th anniversary. In 1900, Jerry’s grandfather began by performing small landscaping jobs. His father later joined the company while attending the University of Massachusetts and graduated with a degree in landscape architecture. One thing led to another and the small company evolved from landscaping into residential and commercial paving. During World War II they gained more construction experience by subcontracting for many utility companies. Jerry always knew he would one day join his father and grandfather in the family business. However, when he was just 16 years old, the unthinkable happened – his father suddenly passed away. With three sons to raise alone Jerry’s mother LaSalle made a crucial decision to keep the business going. Under her management, and with the help of her sons and their trusted employees, the company continued to grow and prosper. In the 1970s the company officially became known as Gagliarducci Construction, Inc. and moved to Indian Orchard, Massachusetts, where it is still located. Jerry’s son Jay joined the company after graduating from college with a degree in civil engineering. What started out as a small landscaping firm with six or seven employees has grown to be a leader in site construction and development in Western Massachusetts. Jerry doesn’t talk much about all of the jobs the company has performed, but he will tell you that he is most proud of the fact that the majority of his employees have been with the company

NOVEMBER, 2013

for more than 25 years. He has extended his commitment to our industry by joining UCANE and becoming actively involved on the government relations committee, as well as serving as our Western, MA representative on our Board of Directors. Because Jerry has so many friends and business associates who wanted to be there for him, it was difficult to keep this award a secret. It was obvious to anyone seated at, or near his table that he was definitely surprised. Accompanying Jerry to the podium to accept the award was his wife Kathy. As if his winning this award was not enough, Jerry was further surprised when he saw his sons Jay and Chris, Jay’s wife Melanie, his brother Paul and his wife, and 24 of his friends and business associates enter the room to personally congratulate him and help celebrate this prestigious and well deserved honor with him.

It was a great pleasure to present UCANE’s 2013 Contractor of the Year Award to Jerry Gagliarducci and we look forward to his continued dedication and support of our Association. n

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CANE’s Associate Member of the Year award is bestowed on the member recognized by their peers for their involvement in our Association, and their support of our industry. These members are usually the businessmen and women who supply and service construction equipment; provide materials; and finance, bond, insure, litigate, and support our contracting companies. However, this year’s recipient was unique because he didn’t fall into any of these categories. This year, for the first time in its 59-year history, UCANE members voted to present our 2013 Associate Member of the Year award to an employee of a state agency, John Sullivan, Jr., Chief Engineer of the Boston Water and Sewer Commission. During John’s 35 years as a UCANE member, he has been instrumental in bringing clean drinking water to millions of people in the Boston area by helping modernize Boston’s underground infrastructure and to reclaim Boston Harbor from years of pollution. Through his vision and dedication, the city of Boston and its Seaport district has been revitalized as a place where people want to live and work, and businesses choose to expand. John was born and raised in Boston. He attended Boston Latin School and graduated from the University of Massachusetts with a degree in civil engineering. He continued his education and received his Master of Business Administration from Northeastern University and his Master of Science in emergency management from Massachusetts Maritime Academy. In 1972, after graduating from UMass, John began working at the Boston Public Works Water Division. The water division was later transferred to the Boston Water and Sewer Commission (BWSC) where John has worked since 1977, and became Chief Engineer in 1988. As Chief Engineer of the BWSC, John has always tried to keep UCANE members informed of his plans by giving an annual forecast presentation at our March Dinner Meeting, so the members can be prepared for the projects coming out to bid. His pro-business relationship with UCANE and our members has greatly benefited the city of Boston, its residents, and the business community. During John’s acceptance speech he remarked how truly stunned he was to receive this award, as he

NOVEMBER, 2013

Anna and John Sullivan

never thought it would be given to a representative of a state agency. He complimented UCANE members on the work they have performed throughout the City saying, “Boston is a great city that has reclaimed its Seaport district and waterfront in large part because UCANE members installed a modern water, sewer, and drain infrastructure that actually works!” In addition to surprising John with this award, UCANE had another surprise for him. John’s wife Anna, his sons Johnny and David, and daughter Kelly were in attendance to help celebrate this special honor with him.

It was a great pleasure to present UCANE’s 2013 Associate Member of the Year Award to John Sullivan. n

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Dig Safe Update 2013 Greetings UCANE Members, Last year we announced the purchase of our new building, and right now we are eager to move in and call it home. Our impressive 10,400 square foot facility allows for growth so that we continue to meet the ever-changing demands of our industry. Please take note that as of January 20, 2014, our new address will be 11 Upton Drive, Wilmington, MA, 01887. We have always been available to hold on-site seminars at your company location, and with our new training room we can now host groups up to 50 people at our facility. We also have ample conference room space to hold meetings for all types of damage prevention stakeholders. Speaking of safety training, you may recognize the name M.U.S.T. (Managing Underground Safety Training) as the group of utilities, locators, regulators, and safety professionals who hold their popular breakfast seminar series throughout New England before the start of each excavation season. Every year contractors tell us that attending the class was time well spent. During the free 3-hour program, you’ll learn about new technology that makes Dig Safe notification easier, find out what all the marks on the ground mean, what to consider when working around gas and electric facilities, and what to do if a utility is damaged to make sure you, your crew, and the community is safe. You’ll also hear from our state regulators about the enforcement process. Invitations for next year’s seminars will be mailed in January, but we encourage you to check the EVENTS page at digsafe.com for dates and locations as they become available. Seats fill quickly, so make sure to register early. We are also excited to report that the Pipeline & Hazardous Materials Safety Administration (PHMSA) has awarded Dig Safe federal grant money to support the development of a phone application for Dig Safe tickets. The app is compatible with iPhone, iPad, and Blackberry, and gives you the convenience of a user-friendly interface to apply for tickets in the field. Check out our progress in implementing this technology in upcoming issues of The Dirt, Dig Safe’s e-newsletter. Not getting The Dirt? Go to digsafe.com and click on Sign Up for Our Newsletter. Please be assured that we will never give your email address to anyone looking to sell you something. Below is a list of emergency phone numbers for the gas companies in our five state territory. For safety’s sake, please program these numbers into your mobile device so you can call immediately if there is an accident. Please do NOT call Dig Safe in the event of a gas incident! First call 911, and then call the gas company’s emergency number to get the immediate help you need. Please check your mail in the next few weeks for our Customer Service Survey, and take a moment to complete and return it. We really do value your feedback about how we can improve our service, and we consider each and every one of your comments. Wishing you and yours a happy, safe, and successful 2014. Lisa Powers, Public Relations Director TRANSMISSION COMPANIES Algonquin Gas Transmission/Spectra Energy Unitil/Granite State Gas Transmission Kinder Morgan Gas Pipeline Company Maritimes & Northeast Pipeline/M&N Operating Co Portland Natural Gas Transmission System

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DISTRIBUTION COMPANIES Maine Bangor Gas Company 207-941-9595 www.bangorgas.com Maine Natural Gas Company 877-532-5636 www.mainenaturalgas.com Unitil 866-933-3821 www.unitil.com continued on page 55

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Dig Safe continued from page 53 Massachusetts Columbia Gas of Massachusetts 800-842-6847 www.ColumbiaGasMA.com Berkshire Gas Company 800-292-5012 www.berkshiregas.com Blackstone Gas Company 508-883-9516 www.blackstonegas.com City of Holyoke Gas & Electric 413-536-9335 www.hged.com National Grid 800-233-5325 www2.nationalgridus.com Middleborough Gas & Electric 508-947-1535 www.mgandeonline.com New England Gas Company 800-936-7000 www.negasco.com NSTAR Gas 800-592-2000 www.nstar.com Unitil 888-301-7700 www.unitil.com Wakefield Municipal Gas & Light 781-246-6363 www.wmgld.com Westfield Gas & Electric Light 413-572-0000 www.wgeld.org New Hampshire Liberty Gas 800-833-4200 www.libertyutilities.com New Hampshire Gas Corporation 603-352-1230 nhgasdigsafe@gmail.com Unitil 866-933-3820 www.unitil.com Rhode Island National Grid 800-640-1595 www.nationalgridus.com/rigas Vermont Vermont Gas Systems, Inc

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SPECIAL ISSUE: 2013 Tax Planning Roundup • • • • • •

John E. Merchant, CPA Cullen, Murphy & Co., P.C.

Smart Tax, Business & Planning Ideas fro

Planning for “Permanent” Ta

Planning for “Permanent” Tax Laws

he American Taxpayer Relief Act of 2012 (ATRA) was signed into law earlier this year. Many provisions of this tax law are permanent, or at least they’ll be permanent until they’re changed. Thus, they have no “sunset” date, so you can plan with some normalcy as we near the end of 2013. ATRA’s main provisions cover both income and estate taxes. On the income tax side, the law—along with provisions of health insurance legislation that took effect in 2013—widened the gap between taxpayers deemed to have high incomes and those with lower incomes. Speaking generally, taxpayers with annual income over $200,000 may have to be concerned with higher tax rates, additional taxes, and phaseouts of tax benefits. Taxpayers with lower incomes will continue to enjoy relatively low rates. Therefore, year-end

tax side, the law— of health insurance effect in 2013—wi taxpayers deemed and those with low generally, taxpayers over $200,000 may with higher tax rat and phaseouts of t with lower income relatively low rates tax planning should include efforts to reduce gross taxinplanning shoul come, for high bracket taxpayers, while perhapsreduce rec- gross incom ognizing income in low brackets. Thetaxable American Taxpayer Relief Act of taxpayers, while pe signed law earlier taxable income in l In2012 terms(ATRA) of estatewas tax, ATRAinto relieves most individthis families year. Many provisions of about this taxfederal estate In terms of esta uals and from concerns law are permanent, or at least they’ll be relieves tax. However, residents of states with state estate tax most indiv permanent until they’re changed. Thus, from concerns abo still can engage in tax planning. Moreover, some tradithey have no “sunset” date, so you can However, residents tional estate planning strategies can offer income tax plan with some normalcy as we near the estate tax still can e savings now and in the future. end of 2013. Moreover, some tra continued 59 ATRA’s main provisions cover both on page planning strategies income and estate taxes. On the income savings now and in

Year-End Tax Planning for In As of this writing, the U.S. stock market is near record levels, heading for GENERAL CONTRACTOR its fifth straight year of positive returns. Therefore, you might not have many Manufacturer and Installer of Bituminous Concrete Products opportunities for tax loss harvesting in 2013. Nevertheless, if you still hold stocks depressed 226 from the Rock crashRoad of 100 Wales Avenue-Rear Nicks Avon, MA 02322 Plymouth, MA 02360 Office: 508-583-2029 Scale House: 508-732-9148 Plant: 508-587-6953 Asphalt Plant: 508-732-9140

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Financial Management continued from page 57

Year-End Tax Planning for Investors

s of this writing, the U.S. stock market is near record levels, heading for its fifth straight year of positive returns. Therefore, you might not have many opportunities for tax loss harvesting in 2013. Nevertheless, if you still hold stocks depressed from the crash of 2008-2009, this may be a good time to take capital losses.

Bonds Drop Back The bond market has retreated in 2013, so you might have losses on individual bonds and bond funds. Especially for upper income investors, taking losses on bonds by year-end might save tax. Example 1: Doug Harris has taxable income over $450,000 in 2013. Consequently, he faces a 20% tax rate on long-term capital gains in 2013. Doug also will owe a 3.8% surtax on net investment income, under the Affordable Care Act. Counting state income tax as well as a phaseout of itemized deductions and

personal exemptions, Doug might owe 30% in tax on long-term capital gains. In December, Doug tallies his capital gains and losses for the year so far; he also contacts his mutual funds to ask about expected capital gains distribution in 2013. Counting his net long-term capital gains in 2013 and expected mutual fund distributions, Doug anticipates reporting $40,000 of gains for the year, continued on page 60

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Financial Management continued from page 59 so he could owe $12,000 in tax on those gains at an effective 30% rate. Instead, Doug sells enough investments to incur $50,000 worth of losses by year-end 2013. Now, he has a $10,000 net loss to report for the year. Under the tax code, Doug can deduct up to $3,000 worth of net capital losses for the year. Instead of owing $12,000 on net gains, Doug has a $3,000 loss. Doug’s loss will reduce his taxable income, which is taxed at a combined federal and state marginal rate of more than 40%. Thus, a reported $3,000 net capital loss will save Doug more than $1,200 of income tax, altogether, when he files his 2013 return next year. After deducting $3,000 for 2013, Doug will have a $7,000 remaining net capital loss that he can carry over to future years.

Watch Out for Wash Sales To take his capital losses, Doug Harris sold securities. He wants to reinvest the money he received. However, if Doug immediately repurchases the same securities he sold, or if he buys securities that are substantially identical, he won’t be able to deduct the capital losses on his 2013 tax return. In order to avoid a so-called “wash sale,” Doug has a few options. He can hold the money in cash for at least 31 days. Then Doug can buy anything he wants, including the securities he sold for a loss. As another alternative, Doug can reinvest right away, as long as he avoids purchasing the assets he sold at a loss. If Doug sold a long-term bond fund from one company at a loss, he can immediately buy a long-term bond fund from a different company.

As long as the second fund does not hold the same bonds as the first fund, Doug won’t have a wash sale.

Swap and Shop In a year when bonds have lost value, such as 2013, bond swapping emerges as a viable strategy. A bond swap is not a trade, like an exchange of baseball cards. In a bond swap, an investor sells bonds and buys similar bonds. Example 2: Linda Powers holds $100,000 worth of municipal bonds that she bought 4 years ago at par. The bonds mature in 15 years, they have an A rating, and the coupon rate is 6%. Those bonds are now worth $90,000. Linda sells those bonds and uses the $90,000 to buy municipal bonds from a different issuer. The new bonds, which mature in 15 years, also have an A rating and a 6% coupon. Thus, Linda gets a $10,000 capital loss, for tax purposes, yet her portfolio is essentially unchanged. Typically, if you acquire a bond with a different issuer, maturity, or coupon rate, your bond swap won’t be considered a wash sale.

Nothing Doing As explained, you may be able to reap tax advantages by selling securities at a loss. In other situations, you might save tax by selling securities at a gain; that’s because ATRA made the 0% tax rate a permanent part of the Internal Revenue Code. In 2013, income from qualified dividends and long- term capital gains are taxed at 0%, for certain taxpayers. To get that 0%, you must be a single taxpayer with taxable income (after deductions) no higher than $36,250, or up to $72,500 on a joint return.

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Example 3: Matt Allen bought shares in a stock fund in 2009 for $20,000. Those shares are now worth $35,000, and Matt fears a market correction. If he sells those shares, he would owe 15% on the long-term capital gain; Matt’s modified adjusted gross income (MAGI) is over $200,000, so he also will owe the 3.8% Medicare surtax. Instead, Matt gives the shares to his retired parents, who generally report about $50,000 of taxable income on their tax return. The senior Allens sell the shares and owe no tax on the $15,000 gain because their taxable income is still below $72,500 for the year.

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continued on page 61

NOVEMBER, 2013

a lower tax king. n 401(k) be 50 or ceiling is re you’re ur budget eiling. On kers with ht minimize tions for to get a ving money h IRA 15. All l be taxage 59½.

s many ns. For modified AGI) on joint end with tment take effect Therefore, oing over

our MAGI, amounts RA 13. Any 14, you can or part of t precise

has IRA. In ts the entire hen Ian has d, he asks Roth IRA x result. a $75,000 ginal nd his wife, ket, which able income

Financial Management continued from page 60

Year-End Tax Planning for Retirement Thus, Ian recharacterizes 75%

Roth IRA conversion with the ideal ($225,000/$300,000) of the conor most workers, tax result. Ian’s CPA determines amount then in his IRA. That tributing to Roth an employer that a $75,000 conversion (25% of sponsored retirement amount reverts to his traditional the original conversion) will keep Ian plan is aowe good idea.inIn IRA.usually The Martins $21,000 and his wife, Alicia, in the 28% tax 2013, passage of ATRA, tax on since the Roth IRA conversion: bracket, which goes up to $223,050 making contributions 28% timesfull $75,000, which they to of taxable income on a joint return plans 401(k)s can be can paysuch out ofas non-IRA funds. in 2013. an tactic Theespecially Martins avoidvaluable moving into Thus, Ian recharacterizes 75% for who the high-income 33% tax bracket;workers they also may ($225,000/$300,000) of the amount are close to retirement. These avoid such extra taxes as the 3.8% then in his Roth IRA. That amount contributions reduce gross Medicare surtax and the phaseout reverts to his traditional IRA. The income and taxable income, Martins owe $21,000 in tax on the of itemized deductions. thus, decreasing expo- recharacterizes the entire internationalRoth IRA conversion: 28% times Meanwhile, Ian has your moved one$75,000, which sure to all the taxes imposed onRoth people in entire IRA, the bond Roth IRA,they can pay out of non-IRA funds. fourth of his traditional IRA to a The Martins high brackets. Ideally, you’ll and distribu$30,000 (25% of the amount avoid moving into the 33% tax bracket; Roth IRA. After 5 years and after age take they also may avoid such extra taxes as the 3.8% tions incan a take lower tax bracket you stop originally convertedMedicare plus 25% of the and the phaseout of itemized deduc59½, he completely tax-freeonce surtax working. net income attributable to it) of his distributions from his Roth IRA, tions. In 2013, mostincome people contribute to Roth IRA. domesticup stock regardless of future taxcan rates. Meanwhile, Ian has moved one- fourth of his tra$17,500 401(k) s and plans. you’ll this ByIffollowing plan, Ian Under thetotax code, all Roth similar IRA ditional IRAavoids to a Roth IRA. After 5 years and after age 1⁄2 be 50 or older December 31, the ceiling isa $100,000 paying tax on Roth conversions have aby January 1 starting 59 , he canIRA take completely tax-free distributions $23,000. to make sure contribconversion to hold $95,000 worth date for theCheck 5-year test. Thus, Ian’ s you’re continued on page 62 uting as much as your will budget upstocks to and he avoids of foreign December 2013 conversion meet permits, the ceiling. other hand, payingyoung tax on a $100,000 Roth IRA thatannual requirement in justOn overthe 4 years, workers might conversion to hold $97,000 worth in January with 2018. relatively low incomes minimize deductible 401(k) contributions for of bonds. He winds up paying tax the year,and putting in enough to get em-Roth IRA conversion Divide conquer onaa full $75,000 ployer match but saving that Ian’s plan, as described, is good money beyond (75% of his original $100,000 for 2013beRoth contribution by next April butacould better.IRA Instead of one conversion) to hold $90,000 worth 15. All Roth IRA distributions will be taxfree $300,000 Roth IRA conversion, he of domestic stocks. Eventually, 1⁄2 after yearshis and after age could5convert traditional IRA59 into. Ian may be able to withdraw that 192 Plain St. multiple RothConversion IRAs, holding different Factors $15,000 in gains, tax-free. investments. By converting the losers That’s the result fromNorth this splitAttleboro, MA 02760 taxthe code now contains many income-based (508) 699-2911 andThe letting winners ride, Ian could conversion. If Ian had just one Roth tax provisions. For example, individuals with modiimprove his results from this soIRA, which grew from $300,000 www.borocorp.com fied adjusted gross income (MAGI) over $200,000 called “look back” opportunity. to $312,000 before a $234,000 ($250,000 on joint returns) may have to contend Example 2: At year-end 2013, recharacterization (75% of the with a 3.8% surtax on net investment income. Othconverts his $300,000 originallevels. amount converted plus erIanprovisions take effect traditional at various income IRA into a $100,000 Roth IRA 75% of the net income attributable Therefore, it can be crucial to avoid going over these holding domestic stock funds, a to it), he would have paid tax on thresholds. $100,000 Roth IRA holding foreign a $75,000 conversion (25% of his One way to fine tune your MAGI, AGI, and taxable stock funds, and ais$100,000 Roth original $300,000 conversion) for a income amounts to execute a full Roth IRA converIRA holding bond funds. In early Roth IRA worth $78,000. Ian would sion at year-end 2013. Any time until October 15, 2014, October 2014, his domestic stock have $3,000 of potential tax-free you can recharacterize (reverse) all or part of that conRoth IRA is worth $120,000, his gains, not $15,000. version to arrive at precise income levels. international IRA is $300,000 in Tohis execute Example stock 1: IanRoth Martin has tradi-this strategy, you can worth $95,000, and his bond Roth use any types tional IRA. In December 2013, he converts the entireof different investments IRA is worth $97,000. any2013 number amount to a Roth IRA. When Ian hasinhis tax of Roth IRAs. Our Ian’ s CPA runs the numbers and office can help return prepared, he asks his CPA to determine the you calculate the most says the ideal plan would be for Ian tax-efficient amount to recharacterize to recharacterize 75% of his original after one or more Roth IRA NOVEMBER, 2013 Thus, Ian “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 61 Roth IRA conversion. conversions. g

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Financial Management continued from page 61 from his Roth IRA, regardless of future income tax rates. Under the tax code, all Roth IRA conversions have a January 1 starting date for the 5-year test. Thus, Ian’s December 2013 conversion will meet that requirement in just over 4 years, in January 2018.

Divide and Conquer Ian’s plan, as described, is good but could be better. Instead of one $300,000 Roth IRA conversion, he could convert his traditional IRA into multiple Roth IRAs, holding different investments. By converting the losers and letting the winners ride, Ian could improve his results from this socalled “look back” opportunity. Example 2: At year-end 2013, Ian converts his $300,000 traditional IRA into a $100,000 Roth IRA holding domestic stock funds, a $100,000 Roth IRA holding foreign stock funds, and a $100,000 Roth IRA holding bond funds. In early October 2014, his domestic stock Roth IRA is worth $120,000, his international stock Roth IRA is worth $95,000, and his bond Roth IRA is worth $97,000. Ian’s CPA runs the numbers and says the ideal plan would be for Ian to recharacterize 75% of his original Roth IRA conversion. Thus, Ian recharacterizes the entire international Roth IRA, the entire bond Roth IRA, and $30,000 (25% of the amount originally converted plus 25% of the net income attributable to it) of his domestic stock Roth IRA. By following this plan, Ian avoids paying tax on a $100,000 Roth IRA conversion to hold $95,000 worth of foreign stocks and he avoids paying tax on a $100,000 Roth IRA conversion to hold $97,000 worth of bonds. He winds up paying tax on a $75,000 Roth IRA conversion (75% of his original $100,000 conversion) to hold $90,000 worth of domestic stocks. Eventually, Ian may be able to withdraw that $15,000 in gains, tax-free. That’s the result from this split conversion. If Ian had just one 62

Roth IRA, which grew from $300,000 to $312,000 before a $234,000 recharacterization (75% of the original amount converted plus 75% of the net income attributable to it), he would have paid tax on a $75,000 conversion (25% of his original $300,000 conversion) for a Roth IRA worth $78,000. Ian would have $3,000 of potential tax-free gains, not $15,000. To execute this strategy, you can use any types of different investments in any number of Roth IRAs. continued on page 63

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Financial Management continued from page 62

Year-End Estate Tax Planning

n 2013, the annual gift tax exclusion increased from $13,000 to $14,000. That is, each individual can give up to $14,000 worth of assets to any number of recipients with no tax consequences. (Married couples can give up to $28,000 per recipient.)

Example 1: Marjorie Palmer gives $14,000 to her son Nick, $14,000 to her daughter Olivia, and $10,000 to her friend Paula, whose home was severely damaged in a storm. Marjorie does not have to file a gift tax return, and she will not lose any of her lifetime gift tax exemption or her estate tax exemption. In this example, Marjorie’s net worth is between $2 million and $3 million. She does not expect to owe federal estate tax, because the exemption is $5.25 million in 2013 and likely to increase in the future. However, Marjorie lives in a state where the estate tax exemption is $1 million. Thus, these gifts will trim her estate’s eventual exposure to state estate tax. People with much larger estates also should consider making gifts up to $14,000 by year-end to reduce future federal and possibly state estate tax. If you don’t make the gift in 2013, you can’t double up in 2014. That is, Marjorie can’t give $28,000 to Nick in 2014 and spread that gift over 2013 and 2014 for gift tax purposes.

they would like to help Greg buy the home. Len and Karen could transfer $50,000 worth of the shares to Greg in December 2013 and another $50,000 worth of shares in January 2014. Each year, the couple’s annual gift tax exclusions would cover $28,000 of the $50,000 gift, reducing the amount they would report on a gift tax return and reducing the impact on their gift and estate tax exemptions. In this example, Greg could sell the appreciated shares and report the capital gain. Depending on the amount of the gain and Greg’s taxable income, he might owe 0% on the sale. Even if Greg does not qualify for the 0% rate, he probably would owe 15% on the gain, less than his parents would owe in this example. Thus, gifts of dividend paying stocks and appreciated assets can save income tax, especially if the gifts are to young adults or to retired parents with modest income. However, gifts to youngsters, including fulltime students under age 24, may trigger the “kiddie tax”; in 2013, unearned income over $2,000 is taxed at the parent’s rate, if reported by a so-called “kiddie.” continued on page 64

Income Tax Tactics As federal estate tax concerns fade for most people, income taxes are rising for high bracket individuals and couples. Even if you are not concerned with state or federal estate tax, using the annual gift tax exclusion may help to reduce your income tax bill. Example 2: Len and Karen Young have taxable income over $450,000 a year. Therefore, they owe a 20% tax on income from qualified dividends and a 3.8% Medicare surtax. Len gives $14,000 worth of dividend paying stocks to their daughter, Jill, who is a 25-year old graduate student with little income; Karen makes similar gifts. In January 2014, the senior Youngs repeat those gifts. Altogether, Len and Karen transfer $56,000 of dividend paying stocks to Jill, who will owe 0% tax on those dividends as long as her income is low. Similarly, high bracket taxpayers might use the annual gift tax exclusion to transfer assets before a planned sale. Example 3: Suppose that Len and Karen also have a son, Greg, who is buying a condo. The senior Youngs hold $100,000 worth of appreciated mutual funds they plan to sell at a long-term gain, fearing a correction, and

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Financial Management continued from page 63

Year-End Tax Planning for Donations

haritable contributions historically have provided tax benefits, and that may be especially true in 2013. Those contributions reduce your taxable income, which may keep you from moving into a higher tax bracket. Moreover, 2013 has been a rewarding year for investors, as reported previously in this issue, but taking gains that increase your gross income may trigger added taxes. Thus, giving appreciated securities held more than one year to charity can be an effective maneuver this year. Example 1: Phil Roberts regularly donates $10,000 to his alma mater each year. He holds $20,000 worth of shares of ABC Mutual Fund, bought years ago for $10,000. Phil is considering selling the shares this year. Instead, Phil donates the $20,000 of fund shares to the university in December 2013, fulfilling his charitable intent for 2013 and 2014. With this donation, he gets a $20,000 tax deduction for 2013 and avoids tax on the $10,000 appreciation. In Phil’s high tax bracket, federal and state taxes might

have cost him around $3,000 on a sale generating a $10,000 long-term capital gain. With this strategy, the $20,000 Phil would have donated in 2013 and 2014 stays in his checking account, so Phil can spend or reinvest that money. If you are interested in donating appreciated securities held more than a year, for a full tax deduction, contact the intended recipient. When you get the information from the charity, tell your financial adviser how the donation should be handled.

Multiple Choice The previously mentioned strategy can work well if Phil is making one $20,000 donation. Suppose, however, that Phil wants to make, say, donations of $2,000 to each of 10 different charities. Processing all those share transfers may be very cumbersome. As an alternative, Phil can make a $20,000 donation to a donor advised fund. Many financial firms and community foundations offer such funds. Once the money is in the fund, Phil can simply advise the fund to make 10 $2,000 “grants” to his chosen charities. continued on page 65

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charities from her IRA. The $20,000 distribution satisfies her $17,000 RMD for the year. For these IRA charitable rollovers, Eve gets no charitable tax deduction. Why, then, should she do them? Because qualified charitable distributions do not count as taxable income. If Eve had taken her RMD for 2013, the $17,000 taxable withdrawal would have swollen her adjusted gross income (AGI) for 2013. A higher AGI, in turn, might have subjected Eve to special taxes or deprived her of certain tax benefits. g

Financial Management continued from page 64

He can defer the grants until a future year and still get the upfront tax benefit if he transfers the shares to the donor advised fund in 2013.

Strategy for Seniors

Although Congress made many recent tax law changes permanent, some provisions still must be renewed every year or two. For example, the socalled “IRA charitable rollover” is allowed in 2013 but its future fate is uncertain. This tax benefit applies only to taxpayers age 701⁄2 or older. If you are in that age group, you can transfer IRA money to a charity or charities of your choice, up to a total of $100,000 in 2013. Executed directly, such a transfer can satisfy your required minimum distribution (RMD) for the year. Example 2: Eve Walker, age 75, has a large IRA. Although Eve does not need the money, she must take at least a $17,000 RMD from her IRA in 2013. So far this year, Eve has not taken any IRA distributions. Eve typically donates $5,000 to each of her four favorite charities every year. This year, she transfers a total of $20,000 to the four charities from her IRA. The $20,000 distribution satisfies her $17,000 RMD for the year.

For these IRA charitable rollovers, Eve gets no charitable tax deduction. Why, then, should she do them? Because qualified charitable distributions do not count as taxable income. If Eve had taken her RMD for 2013, the $17,000 taxable withdrawal would have swollen her adjusted gross income (AGI) for 2013. A higher AGI, in turn, might have subjected Eve to special taxes or deprived her of certain tax benefits. continued on page 66

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Financial Management continued from page 65

Year-End Tax Planning for Business Owners

s mentioned previously, recent tax legislation contains several provisions that impose extra tax on high-income taxpayers, including those with income over $200,000. Often, such taxpayers are business owners. According to the National Federation of Independent Business, over 75% of all small businesses in the U.S. are taxed at the owner’s individual rate. Many small companies are structured as S corporations, limited liability companies (LLCs), and other passthrough entities. With them, company profits are reported on the owner’s tax return, so the owner may owe various additional taxes.

Buy Now Business owners in that situation may want to reduce business profits that flow through to their own tax return. One way to do so is to use Section 179 of the tax code, which lets businesses take a first year

“expensing” deduction for equipment placed in service. The tax law that was passed early in 2013 set the expensing limit for this year at $500,000, with a dollar-for-dollar phaseout beginning at $2 million. Example 1: ABC LLC buys $200,000 worth of equipment in December 2013, bringing the yearly total to $250,000. ABC can take a $250,000 expensing deduction, reducing the income that the LLC owners will report. Suppose, though, that ABC buys a total of $2.1 million worth of equipment in 2013. ABC will be $100,000 over the phaseout base, so the company’s first year deduction will be reduced from the maximum $500,000 to $400,000. For 2014, the Section 179 deduction is now scheduled to drop to no more than $25,000, with a phaseout range starting at $200,000 of equipment purchases. Congress might increase those amounts, but for now it seems like loading up on equipment purchases in late 2013 will be a savvy move. continued on page 67

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Financial Management continued from page 66 Companies may take first- year expensing deductions under Section 179 for purchases of new or used equipment. Either way, the equipment must be placed in service by December 31 to qualify for a 2013 tax deduction. The day that you make the payment doesn’t matter, for the purpose of this tax benefit, so you can actually pay for the equipment in 2014.

Other Expenses Besides purchasing equipment, business owners can take other steps at year-end to reduce company income and their 2013 tax bill. If you regularly pay bonuses to employees, you can pay them in December. Your company might be able to prepay state income tax and real estate property tax due early in 2014. You also might have the business make a charitable contribution by donating outdated equipment, including vehicles, or supplies to a school or another nonprofit organization that can use such items.

Retirement Readiness You also should check into your company’s retirement plan, to see if it’s ideal for your own personal purposes. If your company doesn’t have a plan, you may still have time to set one up.

In 2013, the ceiling for contri-butions to a defined contribution plan is $51,000 per participant. Among defined contribution plans, profit sharing plans are popular. A profit sharing plan can include a Section 401(k) cash or deferred arrangement that allows employees to defer some of their salary while deferring income tax as well. The maximum $51,000 contribution, for high-income participants, can come from the employer and employee combined. Company contributions generally are tax-deductible. Types of profit sharing plans include “age-weighted” and “new comparability” plans. These types of plans can be structured so that profit sharing contributions go largely to older, highly compensated employees, including owner-employees. Example 2: DEF Co. has two co-owners in their late 50s and late 40s, respectively. The company’s three other employees are younger, with relatively low salaries. A new comparability profit sharing plan might call for over $25,000 going to each owner’s account one year while the other three employees receive company contributions under $2,000 apiece. For any of these plans, you should consider the costs as well as the benefits. Reprinted from CPA Client Bulletin. n

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